Rental growth in prime London has slowed to its lowest point in three years, as many landlords consider selling their properties ahead of potential changes to Capital Gains Tax (CGT) in the upcoming October Budget, according to new research…

Knight Frank data shows that rents increased by 2.1% in prime central London (PCL) and 2.2% in prime outer London (POL). These figures represent the slowest rental growth since the summer of 2021, a period when the long-term rental market saw an influx of short-term rental properties due to the pandemic.

Indicating a growing trend of landlords preparing to sell, the number of property appraisals for sale in August was 25% higher than the five-year average in London, Knight Frank reported. An increase in available properties could put downward pressure on prices, although the number of new property listings in August was still 8% below the five-year average, according to data from Rightmove. This is a smaller decline compared to recent years.

Additionally, Knight Frank revealed that the number of new potential tenants in August was 11% below the five-year average, partly driven by a drop in overseas students applying to UK universities.

Although rental prices are stabilising, Knight Frank warned that upward pressure on prices could return if more landlords decide to sell in response to potential regulatory changes.

Andrew Groocock, Chief Operating Officer of Knight Frank’s estate agency division, noted: “We are seeing a notable increase in market appraisals and listings from landlords with rental portfolios. Many property owners believe it may be better to sell now, even if that means accepting a price that is 5%-10% lower, rather than facing the risk of a CGT increase after the Budget.”

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